New Zealand Introduces Flexible Granny Flat Rules for Families

New Zealand has taken a significant step towards accommodating multi-generational living. The introduction of the Building and Construction (Small Standalone Dwellings) Bill allows homeowners to construct granny flats of up to 70 square meters without the need for full building consent. This legislative change aims to facilitate extended family living arrangements while ensuring that privacy is maintained.

According to a survey by LJ Hooker, there is a growing acceptance of living with extended family, as long as individual spaces are preserved. The survey revealed that 27% of respondents were open to cohabitating, but among this group, 60%Mathew Tiller, Head of Research at LJ Hooker.

While the new rules eliminate many barriers to building additional housing, property owners must still notify local councils and ensure that the dwellings comply with the Building Code. Tiller noted that the legislation simplifies the process, making it easier for families to support adult children, aging parents, or relatives with disabilities while maintaining their independence.

Shifting attitudes towards housing are evident, particularly in light of ongoing affordability pressures. Tiller emphasized that many people are now open to multi-generational living, but they prefer not to live in cramped conditions. “Having a separate, self-contained space makes those arrangements far more practical and appealing,” he added.

Cost considerations are also significant. The ability to create additional dwelling space can help younger family members save for property deposits and allow older relatives to age in place with dignity. The updated legislation also removes the requirement for resource consent, although councils retain the authority to apply development contributions to address infrastructure expenses.

As the housing market remains relatively stagnant, the timing of these changes is crucial. Cotality NZ’s Home Value Index indicated that national dwelling values fell by 0.2% in December 2025, closing the year approximately 1% lower than the previous year. Tiller suggested that the easing of mortgage rates, coupled with a tight housing supply, might encourage homeowners to consider adding secondary dwellings.

“Fewer barriers mean more flexibility for property owners,” he stated. The introduction of granny flats could enhance property values, particularly in locations with strong rental demand and good transport links. Properties capable of accommodating compliant secondary dwellings may experience improved saleability and a moderate value increase of up to 5% through 2026.

As New Zealand navigates its housing challenges, the new granny flat rules provide a promising solution for families seeking to support one another while preserving personal space. This legislative change could play a crucial role in addressing rental market pressures, particularly at the more affordable end, where rental prices have remained largely unchanged despite ongoing affordability issues.